January 8, 2022

How can I earn Passive Income & Royalties from NFTs? What is Staking? What is NFT Auctions?

How can I earn Passive Income & Royalties from NFTs? What is Staking? What is NFT Auctions?

Understanding NFT Payment Structures; Royalties, Fixed Prices & Auctions

Understanding the NFT payment structures will help you avert cheating yourself out of a fortune. Whether you are a creator, buyer, or seller, you must know what to expect while cashing out on NFT arts. Like the famous business tycoon Warren Buffett says, the first rule is never to lose money, and the second rule is always to remember the first one. On that note, you can ensure you don't take a beating while investing in non-fungible tokens through three mediums:

  • Royalties 
  • Fixed Prices 
  • Auctions 

Find out more below. 

How Do NFT Royalties Work? 

Since non-fungible tokens are typically intellectual properties, it's only inherent that royalties are a form of a payout. Royalties in NFT collections are lifetime payments made to the creator per sale. You receive these payouts by default for every secondary sale as they are programmed onto blockchain smart contracts. 

NFT royalties percentages vary according to the marketplace, but they are usually between 2% to 10%. For instance, the OpenSea NFT royalties contract states that the creative mind behind the collection will typically receive a 2.5% fee. Meanwhile, you can also select your royalties in NFT by increasing your percentage fee in the "Collection Editor" settings. 

A reasonable NFT royalties standard percentage should be 5-10%. Unfortunately, some NFTs do not pay royalties if it's not categorically stated in the contract, so cross-check well. 

How does Fixed Pricing Work in NFT? 

When selling your intellectual property, you can either select NFT fixed price or auction. Fixed pricing in NFT is the most straightforward option compared to other forms of payments. In this area, there is no negotiation because the terms are specific due to the set price. It is like ordering an item from a standard online store. As a buyer, ensure you have enough crypto in your wallet for the item and gas fees before purchasing. If you are a creator, consider your NFT royalties percentage and the platform's fees while setting the total amount. 

How Do NFT Auctions Work? 

NFT auctions work entirely differently from other payment structures. Is it the bids, countdown, or the NFT that complicates the auction? Whichever way, we have carefully explained the process according to its phases:

Blockchain Technology:

The cryptocurrency you will spend solely depends on the NFT auction site's blockchain. Anyway, most NFT auction platforms are built on Ethereum, meaning you must have enough ETH to complete your transaction. Always make sure you have enough cryptocurrency for the item and gas fees. 

Reserve Price:

Instead of setting a fixed price, the investor will start with a minimum cost. These starting prices are openly displayed on the NFT auction site. Interested buyers can only place bids at or above it. 


Most NFT auction apps implement a 24-hour timeframe for the auction to run. It only begins to count after a prospective buyer places the debut bid. Once the time runs out, the auction automatically ends. According to the NFT auction record, the buyer with the highest bid wins. Nevertheless, a time extension is applicable if a new offer is made during the final 15 minutes. The extended time is an additional 15 minutes, and it provides a window for other potential buyers to bid. It ensures the auction is fair and won squarely. 

In Conclusion,

Unfortunately, double-crossing is expected in the creative world. Hence, you have to understand the payment structures before entering a contract. Although non-fungible tokens have reduced the rate of art fraud, there are still a few discrepancies. So, it would be best to prepare by equipping yourself with the knowledge. 

This article already has all the essential information on NFT payment structures. You have successfully become a confident digital artist that knows his onions!